And without knowing if the controller card itself handles the encoding I can't really recommend a build. But knowing that most do the encoding and just need a PC to do it, base your build around PCI or PCI-E.

Something like this:

-E5200
-http://ncix.com/products/?sku=30765&vpn=P5KPL%2DCM&manufacture=ASUS
-2GB Cheapie RAM
-A cheap case. Antec 300 comes to mind.
-Whatever OS your card can handle. If it'll support Linux, go for it.
-Sparkle 400W PSU. I know you mentioned you have a PSU, but unless it's quality I definatly wouldn't use it to run a build that supports security cameras.

Your GPU is probably best suited elsewhere as this is strictly a 2D application.

oops you are right... its PCI (not PCI-E)

why do you choose p5k pl and e5200?

i never heard of sparkle... so is it really good? i will install winxp pro sp3 on it...